Tata Neu is a solution to Tata’s problem

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Good Morning Dear Reader,


On Thursday evening, Tata Neu went live across all mobile app stores in India.


And well, here’s how it looks.

Yes, the Tata Group, India’s largest conglomerate and one that’s been around for the last 150 years, has finally made a bold move aimed at the future—and it’s done it by going all-in on a digital strategy that’s centred around a single app called Tata Neu. The idea is that consumers can use Tata Neu to do anything and everything around e-commerce and payments. Want to book tickets? Tata Neu. Buy clothes? Tata Neu. Pay electricity bills? Tata Neu. 


If I had to summarise the strategy in one memorable verse, it would be this. 


One app to rule them all,

one app to find them,

one app to bring them all,

and in the darkness bind them.


I use the word darkness here literally, of course. Most apps typically use dark text on a light background. Not the other way around. But Tata Neu seems to have decided to go the other way, for reasons best known to them. 


Last year, when reports emerged that the Tata Group was working on a super app, I asked subscribers of this newsletter to solve what I called the Tata Digital puzzle. I wrote the edition like an abbreviated version of a case-study, going into the history and the motivations of the Tata Group’s digital ambitions and how it wants to use its assets to create something India had never seen before. 


Here’s the question I posed to subscribers. 

In many ways Tata is doing the reverse of what Reliance is doing. Reliance created a platform, got money into it, and used it to execute and build. Tata created a platform, used its own money to buy and assemble others into it, and is now trying to figure out how to make all of this work together.


Reliance needs to figure out execution.
Tata needs to figure out integration.
The story isn’t over, though. A lot remains unclear.


How will Tata solve its e-commerce problem?


What will it acquire next?


And how will all of these companies work together? In what fashion?
What will Tata do next?


Write back. Tell me.

How would you solve the Tata Digital puzzle, The Nutgraf

A ton of subscribers wrote back to me with several fascinating perspectives. Some of you even sent me detailed block diagrams and organisation charts of how Tata Group could combine all of its assets to create something truly formidable. Overwhelmed by the response, we even created a Twitter Space, where hundreds of subscribers joined and listened to others share their arguments over several hours. If you ask those who attended, I think they’ll tell you that it was immensely enjoyable. 


Which is why, on Thursday, when the super app finally went live, it became apparent that Tata Neu had multiple fundamental mistakes. It wasn’t much of a super app, but more like a discovery app linking to multiple digital properties of Tata. It had a cluttered home screen. And from an experience standpoint, it wasn’t particularly revolutionary. 


But above all, Tata’s superapp had made a fundamental error. It’s a mistake that big, legacy, companies often make when they push forward with a consumer app play, aiming to be as nimble as startups. It’s a mistake that nearly everyone makes—from banks to insurance companies, to retail chains and media giants. When they fail, despite their superior resources, it’s almost always because of this reason. 


Tata Neu doesn’t solve a big, urgent problem that exists in the market. 


Instead, Tata Neu ends up solving for Tata itself. That’s why it exists. 


Let’s dive in. 

Tata Neu is trying to change behaviour on both ends of the funnel

To be fair, Tata is solving an immensely complicated problem. It’s a legacy company trying to transform itself into a massive digital entity, and it’s trying to do this in an environment where entities inside the Tata Group aren’t particularly close to each other. 


And to be fairer, it mostly did all the right things leading up to Tata Neu. It created an e-commerce entity (Tata Cliq) and made strategic investments in all the right companies, like 1mg and BigBasket, all leaders in their segments. 


The only part that was unknown was how it would assemble all of these components together to create something truly compelling. There was an expectation that Tata would figure out a way to link all of its resources and assets to create something revolutionary. This product would use all of the constituent parts to create a flywheel, which would inexorably suck in millions and millions of users away from other applications and lock them into the Tata ecosystem.


Basically, a lot of people thought that Tata would pull a Jio. 


And that’s what Tata Neu was supposed to be. 


However, when the app went live, three things became evident. 


1. Tata Neu is a super app without a core asset


In its essence, the core proposition of Tata Neu is that it provides a single destination for users to make purchases across a range of categories. Users get points for purchases, called Neu coins, which they can redeem to get rewards and discounts on future purchases, creating a closed loop. 


This sounds good, in theory.


However, if you install the Tata Neu app on your phone, the first thing you’ll notice is that it’s practically a wall of offers and categories, all jammed together, with seemingly little personalisation or relevance. There are offers on air-conditioners, immediately followed by one for Airpods, then for potato chips, medicines, women’s western wear, makeup, and a feature on Gujarat Titans, the IPL cricket team. And then, there’s an entire section on getaway destinations and staycations. 


Oh, and finally, at the bottom, I was shown a banner advertising a traditional plum cake recipe for the Christmas season.


In April. 


This isn’t just restricted to the homescreen. If you tap on any of the buttons, Tata Neu opens another application in the web-view. So, if I tap, say, a banner ad for potato chips, the Big Basket app opens within the Tata Neu app. 


Then if I tap on a T-shirt, boom, I’m now in the Tata Cliq app experience. 


And it goes on and on. 

When I asked Dhruv Saxena, founder of Obvious, a strategic design consultancy in Bengaluru, about what he thought of the app, he remarked that at first glance, it looked like “they had shipped their org chart”


Admittedly, it’s a little unsettling to see a banner which gives me a 10% off on toor dal just above a banner that offers me a wonderful staycation in Maldives. But in all honesty, things like UX and design aren’t generally the main reasons why apps succeed or fail. 


No, the real problem is something deeper.


And it’s much more fundamental to super apps, specifically. 


The word “super app” has been liberally used to describe apps which have multiple use-cases embedded inside them. Also, depending on who you ask, practically anything can be a super app. Is Paytm* a super app? How about Phone Pe? Or even Amazon? 


There’s no acceptable definition for what makes a super app, especially because the term itself was mostly a marketing term rather than a descriptive one. However, there’s one person who came up with a descriptor for what makes for a super app. 

“Whenever I see a lot of hype around super apps… the question there becomes: what is it that you are increasing the efficiency of? Otherwise it’s just traditional diversification… There needs to be some common asset that you’re increasing the efficiency & experience for, [then] using that to diversify. A super app is a platform play where the underlying, core shared asset is not a software product asset in a traditional sense, it’s something less obvious like, in our case, our fleet.”


Sidu Ponnappa, Gojek’s SVP of Engineering & former MD of Gojek India

In other words, what Ponnappa is saying is that superapps like Gojek added more and more verticals and use-cases to their app because they wanted to utilise their core shared asset, i.e., their two-wheeler delivery fleet, better and more efficiently.

This definition is easier to apply to offline core assets, as opposed to, say, WeChat. But one can argue that WeChat’s core asset is instant messaging between users, and use-cases like payments, news, and the like are ways of increasing the efficiency of that core asset. However, this is predicated by the fact that super apps can add more and more verticals only because the demand for them outpaces the supply. 


So, what is Tata Neu’s core asset whose efficiency is being increased?


It’s hard to say. 


Users? Customers? 


Not really. 


If anything, maybe the core asset whose experience is being increased is the new feature that Tata introduced in the app—Neu Coins. One could argue that this is a core asset and that the app has been created to efficiently use this. 


It’s a stretch to believe that the demand is so high that there was a need to efficiently use NeuCoins, but honestly, I can’t think of anything else. 


2. Tata Neu’s core user problem 


If you answered, the people who regularly shop on one or more of Tata’s multiple digital destinations like Big Basket, Cliq, or Vistara, think again. 


Why would Big Basket’s loyal users suddenly switch to using Tata Neu over Big Basket? Why would Taj hotel’s repeat users do that? Sure, you could argue that they’d switch because Tata Neu would give them incentives against their loyalty. In this case, it’s in the form of a currency called Neu Coins. 


But even this seems like a stretch. People get points for making purchases online using their credit cards all the time. Suppose a credit card company like American Express allowed you to shop on Amazon in a web-view via the Amex app, would you switch to using that? Doubt it.


No. In fact, if you ask me, a significant part of Tata Neu’s core users would be Tata’s dormant users. These are the users who have bought an expensive watch on Titan several years ago and still have points lying in their account. Most of them probably don’t even know that these points exist, and there may be those who do have no idea what to do with it, because they don’t plan to buy another expensive watch. 


However, if Tata Neu converts loyalty points across Tata’s various products into a single currency which can be used across Tata’s properties, I’d imagine that may be of some use to millions of Tata’s dormant customers, who can be reactivated using Tata Neu.


I also imagine that another cohort of Tata Neu’s core users, purely by virtue of its positioning as a rewards destination, will be the most dreaded of all cohorts. 






A lot of people believe that everyone in India is a deal-seeker, but this isn’t true. In fact, if anything, the importance of deals has been slowly declining for the average Indian consumer. 


But not for the deal-seeker cohort. These are the users who will do practically anything to get a discount, deal, or a freebie. They will jump through all the hoops on the internet, like visiting shady discount aggregator websites, illegal streams, and have a working knowledge of all the terms and conditions and loopholes of payment products like credit cards, debit cards, and loyalty point products. It’s important to remember that deal-seeking is a consumer trait, and not necessarily a function of disposable income. For instance, I know multiple executives, VCs, and strategy consultants who make crores every year, but work very hard at finding ways to not pay for music, movies, and even this newsletter. 


Typically, if you have an app that offers a compelling benefit, deal seekers are one of the several cohorts that use your product. They form one of several cohorts who use apps like Flipkart, Myntra, CRED, Netflix, and The Ken. 


But what happens if the compelling benefit your app offers is basically rewards and discounts? 


To Tata Neu’s credit, they know this. This isn’t just idle speculation. Just look at the Tata Neucoins landing page, and how coins are credited. This is created to protect the system from abuse by deal-seekers, who are usually out to game it.

That’s the problem that Tata Neu is facing. Its core set of users are dormant users, who need to be reactivated, and deal seekers, who are trying to get the best discounts. Of all the cohorts in the world, Tata Neu couldn’t have picked a worse set of core users. These are the users whom the app is going to have to fight to engage and retain. 


Let’s just say I don’t envy the digital marketing and product teams at Tata Neu. 


3. Tata’s double behaviour problem


The last curious thing about what Tata Neu is doing is their redemption and payments mechanism. 


Assuming you make a purchase on Tata Neu and collect all those points, do you know how to redeem them? 

Turns out, there’s only one way to do that. 


You need to make the final payment using Tata Pay, Tata Neu’s UPI product. 


Don’t forget, when UPI apps like Google Pay and PhonePe came along, they offered a clear benefit—a better method to make payments. And once users changed the way they made payments, these apps tried to change where we made purchases by introducing things like e-commerce, bill payments, offers etc. CRED did something similar. It offered benefits to pay credit card bills, and then tried to introduce discovery and purchase afterwards.


On the other hand, Tata Neu is doing two things. It’s creating a new destination and trying to change where I buy. In addition, it’s also changing how I pay for it. And it’s doing both at the same time. 


I think Tata Neu will find out that there aren’t too many people who will be willing to do both. 


This is not to say that the Tata Neu app is a complete disaster. Their onboarding is one of the most seamless flows out there, because they picked up my name, addresses, and everything else just from my phone number because Big Basket already had that information. Their implementation of stories, by using content as a hook for discovery, is quite smart, and I would love to see where they go with it. 


But primarily, it’s clear that Tata Neu solves one problem. 


And that is the one that my colleague, Seetharaman wrote about over a year ago.

Most importantly, RIL brought all its entities together, each feeding off the other’s customers, data, and businesses. Something the Tata Group has struggled to do. Something which, according to the former senior Tata CLiQ executive quoted earlier, may be its biggest challenge.
“At Tata CLiQ, we found it easier to engage with non-Tata brands than with Tata brands,” says the former executive. This is because Tata Group has a decentralised style of functioning. Its companies are “fiercely independent”, says a former senior executive of Tata Sons.
It has struggled to create a group-wide customer loyalty programme, too. A recent attempt by Tata Insights and Quants (IQ), a five-year-old analytics unit of Tata Industries, to help create one was met with Tata companies’ reluctance to share customer data with each other, says a former executive with Tata IQ.
A lack of capital and the Tata group’s reluctance to take risky bets meant that its consumer businesses have had problems scaling as well. Arvind Singhal, chairman and managing director of retail consultancy Technopak labels Tata Group’s digital efforts a Rip Van Winkle story. “They woke up after years and decided, let’s talk about something exciting.”

Who’s standing in the way of Tata’s digital supremacy plan?, The Ken

Tata Neu is a solution to Tata’s problems. 

Take care.


Praveen Gopal Krishnan


*Paytm’s founder Vijay Shekhar Sharma is an investor in The Ken.

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Divyansh Singh

Talks about #technology #innovation #investing and #business.

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